Economies by the Match: Listen to France and the United Kingdom

I'm Eilen Seniors, senior global macro strategist with the investment adviser group. As the FIFA World Cup two thousand twenty six unfolds, we're taking you beyond the pitch into economic and political stories shaping the nations competing for the trophy. This is economies by the match.

Friends.

In this World Cup, you will see many players born in France and playing for other countries. For example, the Morocco starting eleven during the first game they played against Brazil were all foreign born. Many were from France. The French economy is surprisingly resilient, but also constrained as well. Growth is expected to be soft in two thousand twenty six, somewhere between point seven and point eight percent, weighed down by the energy shock from the Middle East conflict, and and they have aeronautics and the defense industries providing some visible support for the economy as well.

The deeper issue in France is fiscal. France carries one of the EU's largest government deficits at around five percent of the GDP, and its debt is the third highest in the European Union.

Accredited downgrade and persistent budget panels have kept the French borrowing costs among the highest in Eurozone, and the scene around politics is heating up as well.

France has had a remarkable political churn recently, especially for prime minister positions. The country had five prime ministers since two thousand twenty two with couple PMs lasting only a few days. The two thousand twenty six budget finally passed in February this year only after surviving two nonconfident votes. President Macron is in the final stretch of his second term with very low approval ratings.

He has pivoted largely to foreign policy. He's championing European strategic autonomy and promoting a larger European army. The pension reform he worked on looks like it has been frozen until after two thousand twenty seven presidential election.

Political stability for now, maybe for a brief period, but when we get into the two thousand twenty seven, the presidential election headlines, we will take it over.

Let's talk about the UK there because there are two teams representing the UK, the England team and the Scottish team.

Will cover the UK economy basically covering both teams.

The UK's economy started to resemble more and more like an emerging market economy.

First of all, the economy is dealing with twin deficits, a huge fiscal deficit, and the trade debts.

Political stability is also in question since the Brexit vote with prime ministers getting reshuffled almost every year, and in some years, multiple times. Inflation is high. Borrowing costs are high. Loan demand is low. And due to Brexit, there are still labor shortages in the country.

Talking more about the politics, I would say it is genuinely dramatic.

Keir Starmer's labor government, less than two years after a landslide election, has seen approval rates collapse. That led him to resign from his position.

Andy Burnham, the mayor of Manchester, is the leading candidate to replace Keir Starling.

Meanwhile, the reform UK party led by Nigel Farage has searched so sharply that one projection had it winning more seats than all other parties combined.

The conservatives under Kemi Beninoff are struggling for relevance as well. Before anyone doing business in the UK, political fragmentation is now a structural feature, not a passing phase.

Again, this is Eilen Senius covering global markets for Truist Wealth. For more information about our research, please visit w w w dot Truist dot com forward slash wealth forward slash insights. Enjoy the World Cup two thousand twenty six.